There are 34 FE colleges in the Southwest, and he has to deal with the fact that more of them struggle financially than in any other region.
With colleges serving large catchment areas, they are forced to take more of their learning out to the people - in village halls, pubs, and schools.
"There is an issue about whether you can make that sort of provision pay," said the Learning and Skills Council regional director. "We need to look for a new way of costing what we actually want.
"What the LSC does is decide what taxpayers want to buy with their money from the sector, and about what is sensible for the public purse to fund."
He offers the example of a course in digital photography organised by a community group called Community College for middle-aged people in Gloucester.
"I know and understand why they are not charging people for that learning," he said. "It is based on a run down housing estate, trying to get people into learning.
"We have to ask ourselves, 'Is it appropriate for us to fund it?' In microcosm that is the dilemma we have. We need local decisions based on local knowledge.
"In Bristol you have areas like Clifton with high property prices and high incomes. A short distance away we have areas like St. Paul's It might be appropriate to fund what seems like a leisure course in a deprived area, but not appropriate to fund it for the wealthy residents of Clifton.
"The question is how to make those decisions. A funding mechanism might treat both those areas the same. That's what the Learning and Skills Council was set up to do - to be flexible and to adapt to real local needs."
Colleges serving large hinterland also tend to have smaller class sizes, which adds to their teaching costs. Marketing costs are also greater because they are dealing with many more smaller employers and fewer large companies, said Mr Gillespie.
"Our objective is, working with colleges, to make sure employers get the best deal that meets their needs," he said.
One initiative to help meet that goal is the Park Life project, which has special learning centres set up on industrial estates and business parks to "take the learning facility close to the employees".